ibf$–$lecture1a$ $ $ $ $ tt2012$ …pemb3023/ibf_lect1a_tt12.pdf · 2012. 4. 26. ·...

IBF – Lecture 1a TT 2012

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Lecture 1 Industrial revolution, industrialisation, or economic development?

A mostly quantitative portrait of economic change in B&F over the period. 1. Prefatory remarks on problems and periodisation. 2. International comparisons

a. GDP per capita b. Real wages c. Structure of the employment d. Broader range of indicators

3. Traditional, anglo-‐centric account of Industrial Revolution. 4. Revisionist views of British industrialisation


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1. Problems and periodization. A British narrative: the Industrial Revolution

Coalbrookdale by Night, de Loutherberg, 1801


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A French narrative: the Revolution of 1789

Liberty Leading the People, de la Croix, 1830


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2. International comparisons a. GDP per capita

625

625

6251250

1250

12502500

2500

25005000

5000

500010000

10000

1000020000

20000

200001500

1500

15001600

1600

16001700

1700

17001800

1800

18001900

1900

19002000

2000

2000year

year

yearFrance

France

FranceUnited Kingdom

United Kingdom

United KingdomItaly

Italy

ItalyNetherlands

Netherlands

Netherlands


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Comments

Italy richest in Renaissance, but very long term stagnation -‐-‐ all the way to mid-‐19c. NL takes over as early-‐modern leader, but then stagnates throughout long 18c. Slower growing than B or F in 19c. Britain opens lead w.r.t. France early, by 1700. Post 1700 Britain and France seem to move roughly in parallel. France keeps up, but not able to close gap until after

WWII. Everyone seems to show a marked acceleration from 1820, but that precise timing is a figment of the low frequency data

and the particular countries here. Another common acceleration after WWII – this one is real.

Notes

Source is Maddison. Logarithmic scale Estimates expressed in “1990 international dollars”

Estimates in national currencies are brought to a comparable basis, in a fairly sophisticated way based on PPP, in 1990. National time series of real output then anchored to those 1990 figures.

Before 19c, the estimates are nothing more than educated guesses. Chart shows interpolation between 1500-‐1600, 1600-‐1700, 1700-‐1820.

There are newer and probably better estimates for a number of countries but not France.


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1700

Circa 1700, W. Europe average about 1000 8 countries in 900-‐1100 range (+/-‐ 10% around mean).

500

500

5001,000

1,000

1,0002,000

2,000

2,0003,000

3,000

3,000greece

greece

greecefinland

finland

finlandireland

ireland

irelandportugal

portugal

portugalspain

spain

spainswitzerland

switzerland

switzerlandnorway

norway

norwayfrance

france

francegermany

germany

germanysweden

sweden

swedenaustria

austria

austriadenmark

denmark

denmarkitaly

italy

italybelgium

belgium

belgiumunitedkingdom

unitedkingdom

unitedkingdomnetherlands

netherlands

netherlands


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1820

c. 1820, W. Europe average about 1200 1000-‐1200 range includes 8 countries

(the average is population-‐weighted, so Greece, Finland, Portugal don’t weigh heavily)

500

500

5001,000

1,000

1,0002,000

2,000

2,0003,000

3,000

3,000greece

greece

greecefinland

finland

finlandireland

ireland

irelandportugal

portugal

portugalspain

spain

spaingermany

germany

germanyswitzerland

switzerland

switzerlandnorway

norway

norwayitaly

italy

italyfrance

france

francesweden

sweden

swedenaustria

austria

austriadenmark

denmark

denmarkbelgium

belgium

belgiumunitedkingdom

unitedkingdom

unitedkingdomnetherlands

netherlands

netherlands


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1870

1870 W. Europe average about 2,000. 8 countries fall in range 1400-‐2000

This range is wide, even as percentage of mean. So greater dispersion.

500

500

5001,000

1,000

1,0002,000

2,000

2,0003,000

3,000

3,000greece

greece

greeceportugal

portugal

portugalfinland

finland

finlandspain

spain

spainnorway

norway

norwayitaly

italy

italysweden

sweden

swedenireland

ireland

irelandgermany

germany

germanyaustria

austria

austriafrance

france

francedenmark

denmark

denmarkswitzerland

switzerland

switzerlandbelgium

belgium

belgiumnetherlands

netherlands

netherlandsunitedkingdom

unitedkingdom

unitedkingdom


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1913

c. 1913 mean is about 3,500. Range containing 8 countries is about 1500 wide (more than twice as wide as in 1870), so still more dispersion, even in percentage terms.

500

500

5001,000

1,000

1,0002,000

2,000

2,0003,000

3,000

3,000portugal

portugal

portugalgreece

greece

greecespain

spain

spainfinland

finland

finlandnorway

norway

norwayitaly

italy

italyireland

ireland

irelandsweden

sweden

swedenaustria

austria

austriafrance

france

francegermany

germany

germanydenmark

denmark

denmarknetherlands

netherlands

netherlandsbelgium

belgium

belgiumswitzerland

switzerland

switzerlandunitedkingdom

unitedkingdom

unitedkingdom


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Other estimates of GDP or GNP p.c.

Crafts (JEH 1984) estimates

Basically similar for period of overlap. (France only from 1830; no guesstimates about 18c.) Different method: GNP in national currency in 1910 converted to sterling using market (not PPP) exchange rates averaged over 1905-‐13. Then work backwards using internal-‐only real output estimates. Crafts says exchange rates don’t make too much difference for his calculations. Substantial British advantage of about 50%. France does not look outstanding compared to other European countries in Crafts’ table. Belgium is better at all dates, for example. France is 7th out of 10 in 1910. Very average. In terms of growth rates, France continues to keep up with Britain in these estimates.

O’Brien & Keyder (1978) revisionist estimates.

They estimated commodity output only, i.e. no services. Claimed French output per capita higher than British in 1780s. French output p.c. lower in 19c, but growth rate about same, so keeping up w/ British growth. But I don’t think these estimates command much support any more. Problems

Lack of services. Services were important, especially in Britain, which had biggest merchant fleet in Europe, for example. OB&K had argued most services are producer services, hence only a contribution to commodity production. Difficulties with exchange rates and deflation. They don’t deflate at all, so figures are nominal. Synchronic cross-‐country comparisons ok, but not diachronic within-‐country. They use PPP exchange rates and get very


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different answers depending on whether they use French or British basket. (France has similar output p.c. to Britain in 19c if you use the French basket. Big lag if you use British basket.) British estimates based on Deane & Cole are from income side, French estimates based on Toutain (ag), Markovitch (ind), Marczewski (revised and combined them) from output side (hence no services).

Contemporaries

Milanovic argues that we can take such estimates seriously once we check for internal consistency. (Current working paper and EJ article with Lindert, Williamson.) Compares per capita income to subsistence level in country to avoid exchange rate problems (similar to Allen).

Main basis of such estimates are social tables:

enumerations of the numbers in typical socio-‐economic groups and their average incomes, e.g. 500k tenant farmer households with average income of 50 pounds/year.

Quesnay -‐-‐ most important physiocratic thinker, influence on Adam Smith.

Total income is roughly 7 billion livres. Per capita, about 250 livres p.a. ca. 3.3 times Quesnay’s estimate of subsistence level.

Another contemporary estimate for France, ca. 1780: 3.5 times subsistence (Isnard). A modern estimate: 3.8 in 1788 (Morrison and Snyder). (Another modern estimate is by Toutain 1987. He does not estimate subsistence, but his gdp p.c. estimate of 220 in the 1780s is similar to others.)


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Now for Britain: Massie’s social table for England & Wales, 1759, gives 5.9 times subsistence.

This would put B as much as 75% ahead of F in late 18th century.


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2. International comparisons, cont. b. Real wages of construction labourers .5

.5.51

111.5

1.5

1.522

22.52.5

2.533

31500

1500

15001600

1600

16001700

1700

17001800

1800

18001900

1900

1900year

year

yearLondon

London

LondonParis

Paris

ParisAmsterdam

Amsterdam

AmsterdamFlorence/Milan

Florence/Milan

Florence/Milan


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Similarities and differences w.r.t. GDP p.c.

Italy looks worse. Less well off to begin with and decline rather than stagnation. Italians would consistently have to work more than 250 days to afford a minimal lifestyle. Man works more days, and/or wife and children add market labour. (Naples wages a bit higher than Milan until late 18c, when equally miserable.)

NL looks less exceptional. English advantage w.r.t. France clear, at its widest in mid-‐18c.

Paris always below 1 before 1800. Strasbourg a bit lower. London impressive – highest in Europe, along with Amsterdam Until 19c, wages considerably lower in Oxford and York.

Same general take-‐off sometime in 19c. Timing impossible to isolate with low frequency observations. Notes:

Source is Allen EEH 2001 50 year averages These are “welfare ratios”

Ratios of average annual earnings of a building labourer, assuming 250 days work per year, relative to three very basic (think near-‐poverty) adult-‐male consumption baskets for himself, wife, kids. Basket is uniform across most of Europe but some substitutions like wine for beer or olive oil for butter. Rent for housing was a very small share of expenditure, ca. 5%.


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Components of Allen’s price index

cuisines and climate. Wheat bread was consumed in Spain, while rye bread was

the norm in Poland. Likewise, butter and beer were the usual fare in England,

while olive oil and wine were their counterparts in Italy. I have allowed these

substitutions in the price index. Thus the price of rye bread was used in Antwerp,

Amsterdam, Strasbourg, and the cities of Germany, Austria, and Poland, while

the price of wheat bread was used for London, Paris, Spain, and Italy. The price

of wine was also substituted for beer, and the price of olive oil for butter,

TABLE 3

Consumer Price Index: Basket of Goods

Quantity per

person per

yeara

Price g

silver

per unitcSpending

share

Nutrients/dayd

Calories

Grams of

protein

Bread 182 kg 0.693 30.4% 1223 50

Beans/peas 52 liter 0.477 6.0 160 10

Meat 26 kg 2.213 13.9 178 14

Butter 5.2 kg 3.470 4.3 104 0

Cheese 5.2 kg 2.843 3.6 53 3

Eggs 52 each 0.010 1.3 11 1

Beer 182 liter 0.470 20.6 212 2

Soap 2.6 kg 2.880 1.8

Linen 5 m 4.369 5.3

Candles 2.6 kg 4.980 3.1

Lamp oil 2.6 liter 7.545 4.7

Fuel 5.0 M BTUb 4.164 5.0

Total 414.899 100.0% 1941 80

a Where oil and wine were consumed instead of butter and beer, 5.2 liters of olive oil were

substituted for the butter and 68.25 liters of wine for the beer; 5.2 liters of olive oil yields 116 calories

per day and no protein; 68.25 liters of wine gives 159 calories per day and no protein. In Strasbourg,

the average prices 1745–1754 were 7.545 g of silver for olive oil and 0.965 g of silver for wine.b M BTU ! millions of BTUs.c Prices are in grams of silver per unit. Prices are averages for Strasbourg in 1745–1754. The total

shown in the price column is the total cost of the basket at the prices shown.d Nutrients are computed assuming the following composition:

Calories Grams of protein

Bread 2450 per kg 100 per kg

Beans/peas 1125 per liter 71 grams per liter

Meat 2500 per kg 200 per kg

Butter 7286 per kg 7 per kg

Cheese 3750 per kg 214 per kg

Eggs 79 each 6.25 each

Beer 426 per liter 3 per liter

Wine 850 per liter 0 per liter

421EUROPEAN WAGES AND PRICES


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Allen’s real wage estimates, annual data

.5.5

.511

11.51.5

1.522

22.52.5

2.533

31650

1650

16501700

1700

17001750

1750

17501800

1800

18001850

1850

18501900

1900

1900year

year

year


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Notes

Data have been smoothed: these are 5-‐year moving averages Otherwise same as before.

Comment

London real wages remain high, but decline from 1750 to 1775, stagnate at that low level until after 1800, reach old peak only ca. 1850. Pessimistic picture. Changes in the number of dependants supported would make things seem slightly worse b/c ratio of dependent population to employed/occupied population rose from 2.6 to 3.1 between 1771 and 1821. France prior to revolution

long-‐run stagnation at low level in Strasbourg gently falling real wages in Paris. Both well below 1.

Problem of gap during Revolution and (for Paris) Empire and early 19c. Is the Strasbourg jump between 1788 and 1801 believable? This makes it hard to identify impact of those big events on development of French economy, standards of living. We also lack any annual GDP estimates in this period. Very frustrating.


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Feinstein’s (JEH 1998) estimates

Real weekly earnings for Britain

Allen’s data for male unskilled construction workers in London. Feinstein’s estimate for male and female, all occupations, all regions. There could be very important differences. Changes in composition could outweigh within-‐occupation/region/sex trends. Wages for all occupations and regions could be falling, but the overall average could rise due to increasing weight of high-‐wage occupations/regions/sex. Feinstein’s consumption basket also includes a wider range of commodities including clothing and rent. Feinstein attempts to make adjustments for unemployment. Data available only from 1770, so no long term perspective. Nor international comparison possible.

“The main conclusion of the present estimates is thus that over the 75 years from 1778/82 to 1853/57 the increase in real weekly earnings, allowing for unemployment and short-‐time working, was less than 30 percent, irrespective of whether or not Ireland is included with Great Britain… Wage earners' average real incomes were broadly stagnant for 50 years until the early 1830s, despite the fact that in many parts of the country they were starting from a very low level, having been falling in the second half of the eighteenth century. … (I)t was only after the post-‐1873 downturn in prices that average real earnings finally accelerated.” Feinstein is also pessimistic about other aspects of working class life that these numbers don’t capture.


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80

80

80100

100

100120

120

120140

140

140160

160

160180

180

1801770

1770

17701780

1780

17801790

1790

17901800

1800

18001810

1810

18101820

1820

18201830

1830

18301840

1840

18401850

1850

18501860

1860

18601870

1870

18701880

1880

1880year

year

year


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International comparisons, cont.; (c) structure of employment

2020

204040

406060

608080

801500

1500

15001600

1600

16001700

1700

17001800

1800

18001900

1900

1900Year

Year

YearEngland

England

EnglandFrance

France

FranceItaly

Italy

ItalyNetherlands

Netherlands

Netherlands


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Notes

Source is Allen EREH 2000. Share of the population in agriculture, rural-‐non agriculture, and urban.

Not labour force. Not broken down by sex. 1850 my efforts to infer figures from Allen article details, or taken from elsewhere Procedure

Evidence on total and urban population throughout. Evidence for rural-‐nonagricultural population for early 19c. Assume that value for 1800 and 0.80 of the total rural population for 1500, and interpolate in between. Agricultural population is the remainder. Hence very rough estimates for the early years.

Comment

All countries transitioning from predominantly rural-‐agricultural to urban and/or rural-‐nonagricultural (e.g. protoindustry) This process is more rapid in Britain than anywhere else in Europe.

Starting from a high share of ca. 70%, Britain reaches 25% by 1850. Surpasses even NL and Belgium in urbanisation and small agricultural sector by end.

NL again precocious. Italy again total stagnation. France slow, gentle, incomplete transition. Arguably looks rather backward by the end.


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Urbanisation: share of the population in towns of more than 10,000 inhabitants

Country 1700 1750 1800 1870 England & Wales 13 16 22 43 Scotland 5 12 24 36 Netherlands 33 30 29 29 Italy SI 16 19 21 26 Belgium 20 16 17 25 France 9 9 9 18 Germany 5 6 6 17 Spain 10 9 15 16 Ireland 5 5 7 14 Italy CN 13 14 14 13 Portugal 10 8 8 11 Balkans 14 12 13 11 Scandinavia 4 5 5 9 Switzerland 3 5 4 8 Poland 4 3 4 8 Austria & Hungary 2 3 3 8 Russia 2 3 4 7 Europe 8 8 9 15

Source: Malanima in CEHME

England becomes most urban country in Europe France is about average throughout. Slow urbanisation after 1800. Stagnation in many peripheral countries, in some cases beyond 1800: N. Italy, Balkans, Portugal…


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1870 Labour force allocation by sector Country Agriculture Services Industry Belgium 44 18 38 Denmark 48 30 22 Finland 76 14 10 NL 39 38 22 Norway 50 28 23 Sweden 67 15 17 UK 22 35 42 France 50 22 28 Italy 61 16 23 Portugal 65 10 25 Spain 66 16 18 Austria-‐Hungary 67 18 16 Germany 50 21 29 Switzerland 42 16 42 UK stands out for small agricultural sector.

Belgium and Switzerland have similar industrial share. NL, Denmark have similar services share. Only UK has both large industry and large service sector.

France and Germany very similar here.


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GDP per capita and agriculture’s share of employment, 1870

Belgium

Belgium

BelgiumDenmark

Denmark

DenmarkFinland

Finland

FinlandNL

NL

NLNorway

Norway

NorwaySweden

Sweden

SwedenUK

UK

UKFrance

France

FranceItaly

Italy

ItalyPortugal

Portugal

PortugalSpain

Spain

SpainAustria-Hungary

Austria-Hungary

Austria-HungaryGermany

Germany

GermanySwitzerland

Switzerland

Switzerland1000

1000

10001500

1500

15002000

2000

20002500

2500

25003000

3000

3000gdp p.c.gd

p p.

c.gdp p.c.20

20

2040

40

4060

60

6080

80

80agriculture share of LF

agriculture share of LF

agriculture share of LF


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Notes

Source: Broadberry et al., CEHME vol. 2. Comment

In this period, de-‐agrarianisation was the key to prosperity. No example of a really prosperous, predominantly agricultural economy. This is why the course is about “industrialisation”. Correlation (-‐0.93 for agriculture) is weaker for services (+0.75) or industry (+0.71). Structural change was the key to progress and achieving prosperity in the period up to the mid-‐19c.

After that, it is more about productivity growth within sectors. This is challenged, for the British case, by latest findings of Wrigley and Shaw-‐Taylor, which show Britain much less agricultural already in 1700.

Can we say that industrialisation drove growth of the service economy? Why not service-‐isation?


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ibf$–$lecture1a$ $ $ $ $ tt2012$ …pemb3023/ibf_lect1a_tt12.pdf · 2012. 4. 26. ·...

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